Anhui Korrun Co., Ltd. (SZSE:300577) just reported healthy earnings but the stock price didn't move much. We think that investors have missed some encouraging factors underlying the profit figures.

The Impact Of Unusual Items On Profit

For anyone who wants to understand Anhui Korrun's profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit was reduced by CN¥102m due to unusual items. It's never great to see unusual items costing the company profits, but on the upside, things might improve sooner rather than later. We looked at thousands of listed companies and found that unusual items are very often one-off in nature. And that's hardly a surprise given these line items are considered unusual. If Anhui Korrun doesn't see those unusual expenses repeat, then all else being equal we'd expect its profit to increase over the coming year.

That might leave you wondering what analysts are forecasting in terms of future profitability. Luckily, you can click here to see an interactive graph depicting future profitability, based on their estimates.

Our Take On Anhui Korrun's Profit Performance

Because unusual items detracted from Anhui Korrun's earnings over the last year, you could argue that we can expect an improved result in the current quarter. Because of this, we think Anhui Korrun's earnings potential is at least as good as it seems, and maybe even better! Furthermore, it has done a great job growing EPS over the last year. The goal of this article has been to assess how well we can rely on the statutory earnings to reflect the company's potential, but there is plenty more to consider. If you want to do dive deeper into Anhui Korrun, you'd also look into what risks it is currently facing. You'd be interested to know, that we found 1 warning sign for Anhui Korrun and you'll want to know about it.

This note has only looked at a single factor that sheds light on the nature of Anhui Korrun's profit. But there are plenty of other ways to inform your opinion of a company. Some people consider a high return on equity to be a good sign of a quality business. So you may wish to see this free collection of companies boasting high return on equity, or this list of stocks that insiders are buying.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.